Carmichael: The Value of CSR in a Crisis
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Carmichael: The Value of CSR in a Crisis

At the same time CSR has become part of the business landscape, we have witnessed some of the biggest crises in corporate America’s history. How much has changed in the past 10 years? Has CSR had an impact on how companies respond during a crisis? In what way?

Paul Holmes

While much has been written about the real value of corporate social responsibility—what it means to companies and communities—few would argue that over the past 10 years CSR has grown from activist idealism into a powerful agent to change business practices and operations and communicate with internal and external stakeholders. It has gone from the streets of Seattle into corporate board rooms in record time.


Every day, companies are making significant CSR investments to establish internal teams and functions, deliver audited annual reports on corporate activities, revise internal policies that dictate how decisions are made, and find new ways to engage stakeholders who are at the core of this “movement.”

At the same time CSR has become part of the business landscape, we have witnessed some of the biggest crises in corporate America’s history. How much has changed in the past 10 years? Has CSR had an impact on how companies respond during a crisis? In what way?


Barie Carmichael, APCO Worldwide senior counselor, and formerly chief communications officer at Dow Corning during the breast implant crisis that eventually forced the company into bankruptcy, talks about her perceptions of how CSR has influenced crisis communication.


What are the biggest changes you have seen over the past few years in how companies handle a crisis?


Let me start by saying that most companies work hard to ensure that the integrity, credibility and reputation of the organization is protected, especially during a time of crisis. But there have been major changes in the communication landscape that have had a great deal of influence on how to communicate during a crisis in the most effective way possible.


Let’s start with technology. Communication channels and devices have changed dramatically over the last five years, providing both opportunities and minefields for managing a crisis.


On the opportunity side, when a crisis strikes, management teams are now instantly connected, regardless of their location, through cell phones, satellite phones, BlackBerries or other such devices. They can monitor evolving news

coverage and Internet commentary as it happens. They can issue statements and provide updates through the Internet, brief media or constituents through webcasts, or use that same capability to secure briefings with a geographically dispersed crisis team.


These same opportunities however, pose potential minefields. Media coverage can be instantaneous and constant. Powerful, visual images are circulated immediately—as it happens, outpacing the crisis team’s ability to gain even a

basic understanding of the facts. In addition, through blogs, picture phones and other devices, the public can become a source of news, but without being constrained by commonly understood media policies, such as verifying sources.


But we have also witnessed the growth of what I call oppositional crises, which, like political campaigns, have become much more sophisticated and challenging. Unlike crises that involve an external event, such as airplane crashes, fires or product tampering, oppositional crises involve two “sides” of an issue, such as union disputes, environmental debates or class-action lawsuits. While external crises usually have a distinct beginning and end, oppositional crises can last for years, gathering support from like-minded interest groups, quickly influencing Wall Street and involving regulators and other government entities.


Companies that are well prepared and even adept at managing external crises are often not prepared to deal with oppositional crises. But, companies that recognize the potential magnitude of an emerging oppositional issue can assemble an expert team early enough to mitigate the issue and prevent it from morphing into a full-blown crisis.


What impact has CSR had on how companies respond during a crisis?


We have always expected companies to act ethically, obey the law and operate in a responsible manner. CSR has successfully increased the expectations we have of corporations—both in what they do and how they do it. For example, we expect greater accountability and responsibility in day-to-day operations, as well as during a crisis. We also expect companies to analyze business practices and take action to mitigate areas of potential negative impact

on their customers, employees, the environment or the communities in which they operate. CSR actions may go so far as to anticipate and prevent a crisis.


Perhaps most importantly, there is greater demand for transparency—companies are expected to make public more information on their business operations and the impact those operations have on their employees and the communities in which they operate, as well as society as a whole.


All of this is to say, the bar is higher than in the past—in large part due to CSR.


If companies are not meeting these new expectations as part of their daily operations, or at least moving in that direction, managing a crisis is that much more difficult.


What role should CSR team play in addressing a crisis?


Best practice companies have assembled CSR teams that have the expertise and experience in several areas that are critical to managing a crisis. They are an internal resource for information, relationships with stakeholders, materials, documentation, etc., that can be extremely useful during a crisis.


Ultimately, it is their ability to communicate the company’s values, goals, objectives, policies, etc., with variety of audiences—some friendly, some in opposition to the company—that makes them a particularly valuable resource in a crisis. The best CSR teams can do so in a manner that keeps the dialogue open and builds public good will for the company.


Often when a crisis hits, the initial focus is on finding the right messages to respond to the issue. However, more often than not, a crisis is best handled by first focusing on the appropriate actions to take to address the issue of concern. This is particularly true of an oppositional crisis. Articulating and demonstrating the constructive actions a company is taking helps to move the company off the defensive. Those constructive actions may already be part of the company’s CSR program, once again making the internal CSR team a key resource.


The internal CSR team has established relationships with important third parties whose support and input can be particularly valuable in a crisis. Depending on the scale of the crisis, this network of contacts and stakeholders can be vital constituents to keep informed and updated through direct communication with the company as the crisis evolves.


Frequently, a company is overwhelmed in dealing with a voracious media when it is in the eye of the hurricane. As a result, timely communication to and dialogue with other key stakeholders—customers, employees, the community, business partners, critical third parties—lags. In effect, the news media, not the company, become these stakeholders’ primary source for updates. Obviously, that is not in the company’s best interests. The CSR team can facilitate what stakeholders learn of updates related to the crisis from the company before they see or read it in the news.


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